Senators introduce the "Startup Act 2.0" in May. Half a year later, it's not had a House or a Senate hearing.
Office of Senator Chris Coons

Silicon Valley leaders are hoping that immigration reforms known as "Startup Act 2.0," which have been stalled in the U.S. Congress, will fare better under President Obama's second term.

"I think the main issue the tech industry should focus on is Startup Act 2.0," Andreessen Horowitz's Marc Andreessen told CNET yesterday. "That would be amazing not just for Silicon Valley but for American job creation -- since the companies that are founded by skilled immigrants create so many jobs for Americans."

So far, at least, the left coast's enthusiasm for Startup Act 2.0 has been met with casual disinterest on the part of Washington officialdom. In both the Senate and the House of Representatives, versions of the Startup Act have languished in committees for half a year without a single hearing -- while a fisherman-backed law limiting the commercial sale of longbill spearfish and similar gamefish rocketed through the Senate in a mere 11 days and was signed by Obama last month.

Startup Act 2.0 is not intended to be an traditionally partisan bill. It's backed by Democrats Mark Warner and Chris Coons and Republicans Marco Rubio and Jerry Moran. And its goals are reasonable: up to 50,000 U.S.-educated foreigners with a "master's degree or a doctorate degree" in a science, technology, or math-related field could remain in the country.

A separate section of the legislation authorizes 75,000 "entrepreneur visas." It sets significant hurdles: the startup must hire at least two U.S. employees right away, it must raise at least $100,000 in funding, and it must expand to at least five full-time employees within a few years. (A third section requires federal agencies to evaluate the effect of new regulations on "new businesses to form and expand.")

This is not a proposal designed to displace American citizens -- the most likely effect is immigrants with advanced degrees opening new businesses that hire Americans -- but it's nevertheless made scant progress in either the House and the Senate.

That's been the case even though supporters of the Startup Act 2.0 include Google, Microsoft, the Consumer Electronics Association, TechAmerica, Compete America, Silicon Valley Leadership Group, TechNet, and the wireless providers' CTIA trade association. Facebook, too, has been lobbying on the topic. Steve Case, co-founder of AOL and chairman of the Revolution venture capital firm, wrote in June -- perhaps a little optimistically -- that he believed Washington can "come together and pass meaningful legislation in an election year."

Obama's first term did little to endear him to tech companies on immigration. Obtaining visas has become problematic enough that a slew of tech companies, including Microsoft, eBay, Hewlett-Packard, Intuit, Oracle, Intel, and traditional manufacturers, sent a letter to the president in March warning it has "become increasingly difficult for companies to procure visas to transfer their existing employees to the United States to continue work on products, services, and projects." Obama's former chief technology officer, Aneesh Chopra, signaled that startup visas would only happen as part of "comprehensive immigration reform" -- which could take years.

One political obstacle has been instant opposition from groups like the Center for Immigration Studies, a Washington, D.C. group that favors sharply lower immigration. In August, CIS predicted the Startup Act 2.0 would end up "displacing equally qualified American engineers, programmers, technicians, and others." A few months earlier, CIS dubbed the legislation "The Startup Visa Fraud."

Rep. Lamar Smith -- the same Texas Republican who championed the reviled Stop Online Piracy Act and a separate Internet surveillance bill -- criticized an earlier version of the Startup Act last year. "How is the government to determine which economic vision is feasible and which is pie in the sky?" Smith asked at a hearing. "How will it root out schemes proposed simply to procure a visa?"

Unfortunately for the tech companies, Smith is the chairman of the House committee charged with writing immigration law.

There's likely to be opposition from the left as well. Labor unions, which are close political allies of of the Democratic Party and were key to the president's reelection bid, have been opposing visa liberalization. The AFL-CIO told the president this year it opposes allowing firms to transfer already-employed foreign workers to domestic offices because the practice "has a significant impact on U.S. workers."

This opposition could be overcome if Obama, Senate Democratic leaders, and House Republican leaders made it a priority in 2013.

After all, legal immigrants founded innumerable technology companies including Google, Yahoo, Intel, eBay, and Sun. A Kauffman Foundation study by Vivek Wadhwa found that 52 percent of Silicon Valley startups were "immigrant-founded." A New York Times profile of the sad case of Indian-born Sanjay Mavinkurve, a Google engineer who moved from the U.S. to Canada because of visa problems, highlighted what Silicon Valley views as a broken system for legal immigration.

But that would require confronting their own parties' special interests (no wonder Google's Sergey Brin called on politicians to govern as independents). Sometimes it's a lot easier just to vote for billfish.

About the author

Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
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